Butter soars, cheese markets split: Today’s CME dairy report reveals a seismic shift. Are you ready to adapt, or will your operation be left behind?
EXECUTIVE SUMMARY: The March 6, 2025, CME dairy market report unveils a dramatic divergence in dairy product performance. Butter prices surged 1.75¢ to $2.3000/lb, driven by strong demand and limited supply. Meanwhile, the cheese market experienced a significant split, with cheddar blocks rising slightly but barrels plummeting 5.00¢, signaling potential weakness in food service demand. Global factors, including a strengthening U.S. dollar and increased New Zealand production, are adding pressure to export markets. Rising feed costs threaten producer margins, pushing the milk-feed ratio below profitability thresholds. The report emphasizes the critical need for producers to adapt quickly to these changing market dynamics, offering strategic recommendations to navigate the evolving landscape.
KEY TAKEAWAYS:
- Butter outperforms cheese, suggesting a need to prioritize butterfat production
- Widening block-barrel spread indicates shifting demand patterns in cheese markets
- Rising feed costs and global market pressures necessitate immediate action on risk management
- Producers must adapt quickly to survive, focusing on component optimization and contract renegotiation
- Currency fluctuations and international production trends are significantly impacting U.S. dairy export competitiveness
Butter climbed 1.75¢ today as buyers scrambled to secure supply, while cheddar markets told a tale of two cities—blocks inched up 1.25¢, but barrels plummeted a shocking 5.00¢. Are you positioned to capitalize on these dramatic market shifts?
Today’s Market Movers: Follow the Money
| Product | Closing Price | Change | Trades | Bids | Offers |
| Butter | $2.3000/lb | ↑ +1.75¢ | 27 | 23 | 5 |
| Cheddar Block | $1.6275/lb | ↑ +1.25¢ | 8 | 3 | 0 |
| Cheddar Barrel | $1.6550/lb | ↓ -5.00¢ | 3 | 0 | 1 |
| Nonfat Dry Milk | $1.1675/lb | ↓ -1.25¢ | 2 | 3 | 3 |
| Dry Whey | $0.4900/lb | ↔ NC | 1 | 1 | 1 |
Why Butter Is Outperforming Cheese
Butter’s 1.75¢ climb isn’t just a number—it’s a wake-up call for producers still fixated on cheese. With 27 trades executed (more than all other products combined!), butter shows unprecedented demand strength heading into spring. Are you still allocating components based on outdated price relationships?
Block-Barrel Spread Tightens: What It Means
Today’s pricing created a barrel-over-block inversion of 2.75¢—completely contradicting the historical block premium of 3-5¢. This isn’t just market noise; it’s a structural warning sign. Foodservice demand (primarily barrels) is weakening while retail cheese (blocks) holds steady. What does this mean for your milk marketing strategy?
Trading Activity: Reading Between the Lines
Where Smart Money Is Moving
Butter dominated with 27 trades—nearly triple the volume of any other product. Even more telling: 23 unfilled bids remained at close, signaling buyers are still hungry for more. Meanwhile, barrel cheese saw just three trades with zero bids left standing—a ghost town that speaks volumes about waning processor confidence.
Did You Know?
Every 0.1% increase in butterfat production can boost your milk check by approximately $0.44/cwt at current price levels—more than offsetting potential volume losses.
Global Trends You Can’t Ignore
International Markets Are Shifting the Game
Despite today’s domestic gains, EU butter prices hovering around $2,400/MT continue to undercut U.S. export opportunities. Meanwhile, New Zealand’s 2% year-over-year production increase is flooding global markets—pressuring NDM and whey prices.
The Dollar Problem Nobody’s Talking About
The U.S. dollar strengthened 0.8% this week alone—devastating news for export-dependent producers. With 15% of U.S. dairy production relying on foreign buyers, this currency shift could erase domestic price gains faster than a California drought. Have you hedged your currency exposure?
Future Forecast: Storm Clouds Gathering
| Contract | Price | Weekly Trend |
| Class III (MAR) | $18.32/cwt | ↑ +$0.96 |
| Class IV (MAR) | $18.40/cwt | ↓ -$0.08 |
| Butter (MAR) | $2.4000/lb | ↓ -$0.015 |
Feed Costs Are About to Explode
While producers celebrate butter’s climb, corn surged to $4.4925/bu (+4¢) while soybean meal rocketed to $304.80/ton. This has pushed the milk-feed ratio to a dangerous 2.15—below the 2.25 profitability threshold that separates survivors from casualties. When was the last time you locked in feed costs?
Inside the Trading Pit: What Traders Are Saying
The Whispers You Need to Hear
“We’re seeing cream shortages earlier than usual—butter at $2.30 could look cheap by April,” warned a veteran Midwest trader with 20+ years on the CME floor.
Another broker bluntly said, “Blocks are for pizza, barrels are for restaurants and processed cheese. That 5-cent barrel crash? It’s telling us exactly which sector is struggling right now.”
Three Actions Smart Producers Are Taking Today
Survival Strategy #1: Shift to Class IV
With butter outperforming and the block-barrel spread inverted, component optimization is critical. Prioritize butterfat production immediately—every 0.1% increase adds roughly $0.44/cwt to your milk check at current prices.
Survival Strategy #2: Lock Feed Costs NOW
Corn futures suggest an 8% price hike by June. Forward-thinking producers are securing 60-90 days of inventory today before costs erode already-thin margins.
Survival Strategy #3: Renegotiate Your Contracts
The 5¢ barrel crash signals food service weakness that could persist through Q2. If you’re locked into barrel-heavy contracts, now is the time to approach buyers about shifting volume toward block production.
The Bottom Line: Adapt or Perish
Today’s dairy markets reward agility and punish complacency. Butter’s rally offers a lifeline, but the barrel cheese collapse demands immediate action. The producers who survive this year won’t be the largest or most established—they’ll be the ones who adapt fastest to these shifting market dynamics.
Are you still running your dairy like it’s 2024? If so, you’re already behind.
LEARN MORE
- CME Dairy Market Report 03/03/25: Cheese Prices Tumble Amid Growing Supply Concerns
- Global Dairy Market in 2025: Production Shifts, Demand Fluctuations and Trade Dynamics
- Understanding the Differences Between Cheese and Butter: Pricing Trends, Production and Market Dynamics
Join the Revolution!
Join the Revolution!Join over 30,000 successful dairy professionals who rely on Bullvine Daily for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.
